For a $50K household, married couple, two kids, all income from earnings and standard deductions, the current tax burden is $8.3K. Under 9-9-9, that would grow to $13.5K, an increase of over $5,000 (hat tip: CCH, BS). The WaPo fact checker came to a similar conclusion. E Klein too.
(I expect that any minute now the Tax Policy Center will release a slew of data supporting these points with their much more detailed tax model.)
But Lowrie wouldn’t accept that conclusion. In fact, he asserted that their federal tax would be lower because they’d move from a 15% payroll tax to a 9% income tax. This, as I said on air, is “patently wrong.”
First of all, assuming they plan to exist, they’ll need to consume stuff, and thus they’ll also face the 9% sales tax. That already makes their tax rate 18%, higher than the 15%.
But as Michael Linden points out, and this is widely agreed upon by tax economists, the incidence of the 9% tax on business income (which denies businesses a deduction for wages paid) also hits them, which is why former Joint Tax Committee chief of staff Ed Kleinbard described the tax as a 27% payroll tax for families whose incomes derive from earnings (note that Lowrie is perfectly comfortable with the standard assumption assigning the incidence of the employers side of the payroll tax to the family—this one re the business tax is equally standard).
For a family with $500K, same assumptions as above, their tax bill would fall by $44K.
But where this plan really gets regressive is when you get up into the families who derive their income from non-labor sources. While the details of the plan are fuzzy when it comes to capital gains and dividends, it seems clear that those earning thousands or even millions of dollars in these types of non-labor income would enjoy a massive tax cut. And that would further widen the disparity between the highly preferential treatment of capital gains and dividends on the one hand, and the taxation of “ordinary” wage and salary income on the other.
We’ve got enough income and wealth inequality coming from the pretax distribution—we don’t need to exacerbate it through the tax code.
Middle class families that depend on earnings will pay more taxes under the Cain tax plan. High income families will pay a lot less. His advisors who say otherwise are misleading the electorate and that must not stand.
You Cannot Be Too Cynical About the Republican Tax Bill
The rush to enact the tax bill was designed to mask — as a break for the middle class — what is in fact a $1.4 trillion package of benefits for key donors and lobbyists, the richest members of Congress, President Trump, his family and other families like his.
.. The speed from introduction to passage — seven weeks, with no substantive hearings — effectively precluded expert examination of the legislation’s regressive core, its special interest provisions and the long-term penalties it imposes on the working poor and middle class through the use of an alternative measure of inflation — the “chained CPI.”
.. The primary authors of the report — Ari Glogower, David Kamin, Rebecca Kysar, and Darien Shanske — describe the legislation as “a substantial blow to the basic integrity of the income tax” that will “advantage the well-advised in ways that are both deliberate and inadvertent.”
.. The most serious structural problems with the bill are unavoidable outcomes of Congress’s choice to preference certain taxpayers and activities while disfavoring others — and for no discernible policy rationale.
These haphazard lines are fundamentally unfair and inefficient, and invite tax planning by sophisticated taxpayers to get within the preferred categories.
.. The game is clear: Don’t be an employee, instead be an independent contractor or partner in a firm.” The ability to make this shift is available primarily to the well-paid.
.. It means that old property can still get the benefit of expensing, but only if it is sold to another party. If the original owner holds it, they have to depreciate according to the old rules; if they sell it to another party, then suddenly the full cost is eligible for expensing
.. It appears that the buyer of the asset could even lease it back to the existing owner, so that the property doesn’t even have to go anywhere.
.. create new incentives to shift tangible assets (and jobs) abroad. Given President Trump’s relentless message about U.S. jobs, it is incomprehensible to me that we are about to pass something that has this effect without any kind of meaningful discussion of the issue.
.. lower and middle-income families, who are especially dependent upon inflation-indexed deductions, credits, and bracket thresholds, will feel the impact increasingly as time goes on.
.. In the long term, Hemel argued,
this is a very subtle way to increase taxes on the lower and middle classes and then use those revenues to pay for a massive tax cut for corporations.
.. the shift to chained CPI — a less generous, slower-growing measure of inflation than the one currently in use — would not only result in a tax increase over time, it would set a precedent for Republicans who would like to use the same method to pare back so-called entitlement programs like Social Security and Medicare. It is, in effect, a backdoor method of reducing benefits for the elderly and the disadvantaged without public scrutiny or debate.
.. offers little redress to workers who have grown to believe that the country’s tax law thicket advantages those with power, political connections and lawyers on retainer.
.. (2) Carried interest provision. When Trump was careening around in his populist candidate mode, he promised to end it. Here is one campaign promise that he “somehow” failed to redeem when the clear and available chance presented itself.
(3) Restriction on state and C local tax deduction — consciously vindictive imposition of double taxation on citizens of certain Democratic states
.. (4) Expanding the standard deduction but financing the cost of so doing by repealing the personal exemptions is a bit of a bait and switch maneuver. Some people might be worse off.
(5) In a bill in which 100s of billions of dollars were sloshing around to provide steep tax cuts for already wealthy and highly prosperous corporations and pass through businesses, the Republicans could only find the will to raise the refundable portion of the child care tax credit from $1000 to $1400. Rubio wanted it to be raised to $2000 and his Republican brethren refused to even meet him halfway. Pitiful.
.. (6) Deduction for extraordinary medical expenses — retention of this deduction did not even get the five-year sunset window applied to all the other individual tax provisions, two years only. Vicious.
.. How well does this procedure stand up to the requirements Senator Ben Sasse specified in his maiden Senate speech on Nov. 3, 2015? In it, Sasse argued that the Senate was failing in its responsibility to fully air and debate the important issues before the county, calling for what he called “a cultural recovery inside the Senate”:
.. Good teachers don’t shut down debate; they try to model Socratic seriousness by putting the best possible construction on arguments, even — and especially — if one doesn’t hold those positions.
.. How could nearly every Republican representative — and all 52 Republican senators — support the tax bill? The best answer may be the most cynical: because it benefits key leaders, their friends, their heirs and their donors.
.. it is difficult to conclude that the motivations of its sponsors are either benevolent or somehow in the best interests of the country. More likely it is hypocrisy and venality mixed up into one awful bill.
Donald Trump’s Crisis of Legitimacy
morning papers were full of stories demonstrating that his political legitimacy, or what small reserves he had left of it, was steadily draining away. After days of prevaricating, America’s business leaders were finally abandoning him en masse.
- Top generals from all five military branches were issuing statements implicitly rebuking him.
- Many White House staffers were despairing of him.
- And even some members of the Society for the Protection of Spineless Conservative Politicians, otherwise known as the leadership of the Republican Party, were starting to distance themselves from him, albeit hesitantly and anonymously, via leaks to journalists and statements from well-connected intermediaries
.. “I see no equivalence between those who propound fascist views and those who oppose them,” Theresa May, the British Prime Minister, said in a statement.
.. It is now clear that when Trump announced on Wednesday that he was disbanding two White House advisory councils made up of C.E.O.s and other business bigwigs, he was telling another one of his tall tales. One of the groups, a council on manufacturing, had already agreed to disband itself, because its members could no longer justify (to their employees, stockholders, and customers) coöperating with the cretin who said there were some “very fine people” among the torch-wielding protesters who marched through Charlottesville on Friday night, chanting “blood and soil” and “Jews won’t replace us.”
.. As of this writing, none of Trump’s aides has resigned in protest at the President’s statements. But a number of them have been busy getting the story out that they are mad as hell.
- Three different sources told the Times that Gary Cohn, Trump’s top economic adviser, who is Jewish, was incensed by the President’s remarks. The Washington Post reported that
- John Kelly, the former Marine general who took over as the White House chief of staff a couple of weeks ago, with a mandate to impose some order on all the chaos, had been left “deeply frustrated and dismayed;
- Bloomberg reported that Steve Mnuchin, the Treasury Secretary, who was standing next to Trump at Tuesday’s Trump Tower press conference, had gathered his staff together and assured them that he had no idea that the President was going to say what he did.
.. Before composing his ode to the statues of Confederate leaders, he tore into two Republican senators who had dared to criticize him by name for what he said about Charlottesville: Lindsey Graham, of South Carolina, and Jeff Flake, of Arizona. In one tweet, he described Graham as a “publicity seeker.”
In another, he endorsed a little-known Republican politician who is challenging Flake in a primary race: “Great to see that Dr. Kelli Ward is running against Flake Jeff Flake, who is weak on borders, crime and a non-factor in Senate. He’s toxic!”
.. Bannon described the Unite the Right marchers as “a fringe element” and “a collection of clowns.” But that seemed like an effort to have it both ways, which is a familiar Bannon tactic. As the head of Breitbart News, he gave an influential platform to elements of the alt-right but vehemently denied that the site was racist.
.. “If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats,” Bannon told Kuttner.
..“Trump is using the precious capital of the bully pulpit to talk about confederate monuments in between savage attacks on fellow Republicans,” Holmes, the former aide to McConnell, told Politico Playbook. “Just think about that.
- Not tax reform.
- Not repeal and replace.
- Not North Korean nuclear capabilities.
- No focused critiques on extremely vulnerable Democrats who have opposed him at every possible turn.”
.. While McConnell and Paul Ryan, the Speaker of the House, have both put out statements saying that racism and white supremacism have no place in the G.O.P., neither of them has explicitly criticized Trump. Even now, most Republicans are too intent on pursuing their regressive policy agenda, and too frightened of incurring the wrath of the Trump-supporting hordes going into the 2018 midterms, to do what almost all of them must know, deep down, is the right thing.
.. Outside the arena of national security, the Presidency is a weak office; to get anything substantial done, the person in the Oval Office has to put together coalitions, bringing along powerful people and interest groups. As the health-care fiascodemonstrated, Trump wasn’t very good at that stuff to begin with—forgive the understatement—and he has just greatly compounded his difficulties.
.. By dint of his pigheadedness, or prejudice, or both, he has moved onto political ground that makes it virtually impossible for other people in influential positions .. to stand with him, or even to be seen to coöperate with him. That is what happens when a President throws away his own legitimacy.
.. Trump may have convinced himself that he doesn’t need political allies, or corporate advisers, or anybody else—that he can bully his opponents into submission and succeed through simple force of will. Maybe he thinks that invoking the memories of Lee and Jackson, the Southern battlefield commanders, will help his cause. It won’t: the fate of the Confederacy was settled more than a hundred and fifty years ago, and right now, Trump’s Presidency seems headed to a similarly ignominious ending.
Trump Knows How to Push Our Buttons
The Trump administration hopes “Democrats will react by defending immigration and look ‘soft on gangs,’ ” aware that “if they push the envelope on this issue they can get coverage for their efforts and drown out Democratic efforts to change the topic.”
.. Brodnitz described Trump’s tactics as offering “ideas that sound really outlandish but that they believe have popular support — at least with their core voters” and that the Long Island speech was based on “the hope that Democrats would look more concerned about criminals than about crime and its victims.”
.. it has been difficult for the Democrats to recruit key white voters to consider an economic agenda in the face of concerted efforts by the Trump campaign and his administration to shift the focus to crime.
.. the percentage of Americans who said they had “great respect” for the police had risen from 64 percent in 2015 to 76 percent in 2016.
.. I think, yeah, a lot of people, whites anyway, think that the police are too constrained. When I watch the anarchists tear up Oakland, which happens pretty regularly, a part of me thinks “where are the 1968 Chicago police when we really need them?” These thugs behave the way they do in part because there are no consequences. Also, we see a lot of cases on TV where someone is resisting arrest, the police wrestle him down and hit him a few times, and then there are complaints about excessive force. Heavens’ sakes, if someone doesn’t comply with an order, what are the police supposed to do?
.. “Trump is endorsing the lex talionis — an eye for an eye,” Jonathan Haidt, the author of “The Righteous Mind” and a professor of ethical leadership at N.Y.U.’s Stern School of Business, wrote in an email. In his own surveys, conducted at YourMorals.org, “only a subset of people on the right endorse such beliefs; it’s basically the authoritarians, not the Burkean or ‘status quo’ conservatives.”
.. One question Haidt’s survey asks respondents is whether they agree or disagree with the idea that “a criminal should be made to suffer in the same way that his victim suffered.”
Haidt said “progressives strongly reject it, and it correlates fairly well with politics — the farther right you are, the more you endorse it.”
.. It appeals to one of our worst angels, the desire for “rough justice” — quick and brutal revenge inflicted on a suspected wrongdoer. The ultimate evolutionary rationale for revenge, vendettas, blood feuds, mob violence, summary justice, lynching, vigilantes, deadly ethnic riots, the code of the streets, and other forms of rough justice is deterrence: if a person anticipates getting beaten up for exploiting people, he’ll think twice about exploiting them.
Trump, in Pinker’s view, has focused on the most primitive and regressive emotions among voters:
.. Pinker sees this as part of an ongoing struggle.
The appeal of regressive impulses is perennial. The forces of liberalism, modernity, cosmopolitanism, the open society, and Enlightenment values always have to push against our innate tribalism, authoritarianism, and thirst for vengeance.
And yes,
at times in history the darker forces prevail — the two world wars, the American crime wave from the 1960s to early 1990s, the rise of civil war in the developing world over that same period. These darker forces, moreover, are not just raw instincts, but often rationalized in ideologies.
.. This puts the Democrats in a dangerous position. The more they succeed in pushing Trump up against a wall, politically speaking, the more they risk the possibility that the he will inflict real damage, whether it is hostile engagement abroad or increasingly aggressive attacks on democratic institutions at home.
.. In an excerpt that was published by Politico, Flake describes
the strange specter of an American president’s seeming affection for strongmen and authoritarians created such a cognitive dissonance among my generation of conservatives — who had come of age under existential threat from the Soviet Union — that it was almost impossible to believe.
.. What Flake recognizes, and what Democrats are only coming to realize, is that Trump represents a systemic assault on the legitimacy of America’s democratic processes, an attack that needs to be countered by far more that a modest collection of economic policies organized under the rubric “a better deal.”